이 기사는 2021년 10월 12일 07:58 thebell 에 표출된 기사입니다.

South Korea’s Woori Financial Group aims to make external growth through a two-track strategy in which it grows in size through mergers and acquisitions (M&A) and strengthens its non-banking affiliates.

Industry insiders believe that Woori Financial has sufficient investment capability to make M&As and financially support its non-banking affiliates. Analysts said the group is capable of investing up to 6 trillion won ($5.02 billion).

The financial holding group has strengthened its capability through a series of capital increase and issuance of hybrid securities since it adopted a financial holding company structure. It also has improved its BIS capital adequacy ratio on the back of its preemptive efforts to reduce risk-weighted assets (RWAs).

Woori Financial’s RWAs amounted to 210.45 trillion won as of the end of June. The group has managed its RWAs through asset growth at an appropriate level every year.

The group’s non-performing loans (NPL) included in RWAs are also significantly lower than its rivals. Woori Financial’s NPL ratio stands at 0.37%, lower than KB Financial’s 0.77% and Shinhan Financial’s 0.50%. Hana Financial’s NPL ratio is at 0.36%.

It’s BIS capital adequacy ratio is also well-managed as its equity has increased, with its equity capital standing at 29 trillion won, common equity tier 1 capital at 21.5 trillion won, and tier 1 capital at 25 trillion won as of the end of June.

The financial conglomerate is set to get approval from the Financial Supervisory Service (FSS) on using the internal ratings-based approach for calculating RWAs, which will boost the group’s BIS capital adequacy ratio. A financial company with a higher ratio has more room to beef up assets through loans and M&As.

Woori Financial has continuously raised money by issuing hybrid bonds, which could lower its double leverage ratio. The group issued hybrid bonds totaling 900 billion won last year and 400 billion won so far this year.

The group’s BIS ratio is expected to rise due to an increase in capital through issuance of hybrid bonds, which will strengthen its capability to make investments.

The group’s double leverage ratio, calculated as investment in subsidiaries divided by total equity, was 101.33% as of the end of June, lower than the industry average of 115.31%. The country's financial authorities recommend domestic financial holding companies to keep their double leverage ratio lower than 130%. Based on this, Woori Financial’s investment capacity is estimated to be about 6.2 trillion won.

“Woori Financial Group achieved a remarkable turnaround in the first half of this year, and it is expected to be fully privatized after the Korea Deposit Insurance Corporation’s announcement to sell a 10% stake in Woori Financial Group,” said an official at the group.

“We plan to actively strengthen the non-banking business within the group through M&As and capital increase based on solid performance and the successful privatization.” (Reporting by Seul-bong Go)